Eng. Joao Carlos Po Jorge, General Director (CEO) of LAM Mozambique Airlines is a veteran of the air industry in Africa. He currently serves as the Chairman of the Executive Committee of African Airlines Association, AFRAA. He spoke with Aviation & Allied Business Journal on the sidelines of the 54th AFRAA AGA in Dakar, Senegal.
Q: How has LAM Mozambique recovered from the COVID Pandemic?
A: COVID definitely impacted all of us. Not only for the groundings but also for the unforeseen changes. The unpredictability was the highest challenge we had. Thankfully in Mozambique, we never stopped flying completely. The government allowed us to continue flying, there was no capacity restrictions on the airplanes, but we had to follow the procedures related to prevention such as wearing masks and other measures related to it. So that way, two to three months into the pandemic we were able to return some wet lease aircraft we had in order to alleviate the financial pressures that we had and we were able to fly with an optimum fleet and were able to pay our basic bills. After COVID came, we realized we had to do a lot of cost reduction and be very careful with our commercial planning so that we would not be flying our planes empty. So, our numbers improved a little bit, our revenues got better for the cost that we had. In the beginning of 2021 COVID came again, that was Omicron so it was really hard but the rest of 2021 starting from March was good for us.
We slowly saw an increase in passenger volumes, and towards the end of the year we were actually doing quite well, still at about 60-70% of pre COVID figures. In 2022, we recovered completely. Our revenues were quite high, we have actually used the quietness of 2020 when COVID was there, to streamline and introduce some auditing, revenue accounting and other tools into our systems so our revenue leakages got better which resulted in the operating profit we are going to show in 2022.
Q: Did LAM experience cargo growth?
A: Indeed, what we realized was that there was very high paying cargo like the vaccines, and we did that. We never took cargo on the seats but we did some flights that were more cargo revenue than passengers. So that made us realize we had niches in the market and this is one we could tap into. And the market also realized that when there is a good service you just don’t ship cargo when there is belly space available. So cargo helped us a lot in that sense.
Q: Is LAM Mozambique collaborating with other airlines?
A: Collaboration has always been there and we always thought it was nice to have but not a priority really, if I may say frankly. But with COVID there were too many risks beyond our imagination and if you do not have established cooperation basis it is very difficult to face events that might come in the future. So I have seen and I also taken the position that if you are considering network expansion, you would have to look at the opportunities for cooperating. If an airline has introduced a flight on a route which I was thinking about then we talk about it and introduce codeshare. We can share frequencies on the route. Definitely cooperation is a must now not just an option in order to guarantee sustainable success of our operations and a better product to the market.
Q: Where do you see growth opportunities for LAM going forward?
A: We would like to increase dramatically on tourism including African and Domestic. We have already started working with tourism destinations and we had actually been using active fares to promote tourism destinations that exist. But not only that, we want to participate in creating more capacity for tourism where we can. Not so much on equity, we don’t want to be involved in that; but more in timing and suggesting where we can see more opportunities in the tourism side.
We also have the oil and gas projects which are very big, bringing a lot of people. We are combining some tourism with that and some trade as we see lots of cargo for personal consumption, cargo for industrial use; but we also want to help the people visiting those tourist sites both on the Mozambican side and the countries around Mozambique.
Q: What about the issue of Security?
A: The security issues in the north were a big hit on everybody’s head in the past. The government has cooperated with other governments and since then the security situation has improved so much that we see more activities in the area, related to the oil and gas industry. We have operations that have just started a few months ago and we believe that early next year (2023) more announcements will be made. In our case, the traffic has grown because there has been a lot of involvement of NGOs, international organizations and the government in order to reestablish some operations and manage the displaced people. So, we have seen growing demand for both cargo and passengers to destinations in the north.
Q: Is Government planning to Privatize LAM?
A: The government has not announced. They are looking at all state-owned companies and they have selected and have decided which ones are strategic and LAM Mozambique is one of them. And that is why government is paying attention to all the options that are there, so it is not defined yet whether there is going to be a pure privatization or equity, or selling of shares in local market. There is no definition yet because the government is taking a very important role in looking microscopically at what is there now. There are institutions looking into each company individually to see what are the implications of going one way or the other. I believe and assume that government will make a decision very soon to say this is the way to go. First and foremost, they have made us become operationally profitable since 2021 and 2022 has been like that, so that makes it a bit more attractive for any solution that the government may want to envisage.
Q: Does LAM require Injection of Capital?
A: Yes, we will definitely at one stage have additional capital to guarantee our growth but of course all that will only happen when there is a definition of how to handle the ownership and what the government wants to do going forward with the airline.
Q: What are your plans for 2023?
A: 2023 we should see opening of some more regional routes and some inter-provincial destinations. Now the way we do Maputo in the south which is the hub is very inconvenient for the passengers. We want to deploy additional aircraft in the north. Maybe two more Q400s and one 737-700 and we would want to see what the oil gas industry is doing too and how we can grow to respond to that because usually the gas has very high demand and we have to go into a special project. So, we will see significant growth in 2023.
Q: How has your experience in the support side assisted your work as the CEO?
A: When I took over one of the big issues was reliability and on time performance. So that really helped me a lot, my previous experience in the network. It was interesting because, the same people were able to tackle it and to recover reliability and on time performance. We were losing market share at that time because we had some competitors in the domestic market. Maybe because of that we recovered it immediately. And now we are experiencing post COVID some issues but I think it has to do with current global logistics, quality of repairs, and availability of MRO and repair facilities.
One of the things that was very helpful was the training of the people. We are investing a lot in training younger managers, younger engineers, younger pilots and others in management functions which was tapped from my background in customer support. And it is really working well. I am very impressed with the youth, the way they are eager to learn and to implement what they have learnt.
Q: How has LAM Mozambique recovered from the COVID Pandemic?
A: COVID definitely impacted all of us. Not only for the groundings but also for the unforeseen changes. The unpredictability was the highest challenge we had. Thankfully in Mozambique, we never stopped flying completely. The government allowed us to continue flying, there was no capacity restrictions on the airplanes, but we had to follow the procedures related to prevention such as wearing masks and other measures related to it. So that way, two to three months into the pandemic we were able to return some wet lease aircraft we had in order to alleviate the financial pressures that we had and we were able to fly with an optimum fleet and were able to pay our basic bills. After COVID came, we realized we had to do a lot of cost reduction and be very careful with our commercial planning so that we would not be flying our planes empty. So, our numbers improved a little bit, our revenues got better for the cost that we had. In the beginning of 2021 COVID came again, that was Omicron so it was really hard but the rest of 2021 starting from March was good for us.
We slowly saw an increase in passenger volumes, and towards the end of the year we were actually doing quite well, still at about 60-70% of pre COVID figures. In 2022, we recovered completely. Our revenues were quite high, we have actually used the quietness of 2020 when COVID was there, to streamline and introduce some auditing, revenue accounting and other tools into our systems so our revenue leakages got better which resulted in the operating profit we are going to show in 2022.
Q: Did LAM experience cargo growth?
A: Indeed, what we realized was that there was very high paying cargo like the vaccines, and we did that. We never took cargo on the seats but we did some flights that were more cargo revenue than passengers. So that made us realize we had niches in the market and this is one we could tap into. And the market also realized that when there is a good service you just don’t ship cargo when there is belly space available. So cargo helped us a lot in that sense.
Q: Is LAM Mozambique collaborating with other airlines?
A: Collaboration has always been there and we always thought it was nice to have but not a priority really, if I may say frankly. But with COVID there were too many risks beyond our imagination and if you do not have established cooperation basis it is very difficult to face events that might come in the future. So I have seen and I also taken the position that if you are considering network expansion, you would have to look at the opportunities for cooperating. If an airline has introduced a flight on a route which I was thinking about then we talk about it and introduce codeshare. We can share frequencies on the route. Definitely cooperation is a must now not just an option in order to guarantee sustainable success of our operations and a better product to the market.
Q: Where do you see growth opportunities for LAM going forward?
A: We would like to increase dramatically on tourism including African and Domestic. We have already started working with tourism destinations and we had actually been using active fares to promote tourism destinations that exist. But not only that, we want to participate in creating more capacity for tourism where we can. Not so much on equity, we don’t want to be involved in that; but more in timing and suggesting where we can see more opportunities in the tourism side.
We also have the oil and gas projects which are very big, bringing a lot of people. We are combining some tourism with that and some trade as we see lots of cargo for personal consumption, cargo for industrial use; but we also want to help the people visiting those tourist sites both on the Mozambican side and the countries around Mozambique.
Q: What about the issue of Security?
A: The security issues in the north were a big hit on everybody’s head in the past. The government has cooperated with other governments and since then the security situation has improved so much that we see more activities in the area, related to the oil and gas industry. We have operations that have just started a few months ago and we believe that early next year (2023) more announcements will be made. In our case, the traffic has grown because there has been a lot of involvement of NGOs, international organizations and the government in order to reestablish some operations and manage the displaced people. So, we have seen growing demand for both cargo and passengers to destinations in the north.
Q: Is Government planning to Privatize LAM?
A: The government has not announced. They are looking at all state-owned companies and they have selected and have decided which ones are strategic and LAM Mozambique is one of them. And that is why government is paying attention to all the options that are there, so it is not defined yet whether there is going to be a pure privatization or equity, or selling of shares in local market. There is no definition yet because the government is taking a very important role in looking microscopically at what is there now. There are institutions looking into each company individually to see what are the implications of going one way or the other. I believe and assume that government will make a decision very soon to say this is the way to go. First and foremost, they have made us become operationally profitable since 2021 and 2022 has been like that, so that makes it a bit more attractive for any solution that the government may want to envisage.
Q: Does LAM require Injection of Capital?
A: Yes, we will definitely at one stage have additional capital to guarantee our growth but of course all that will only happen when there is a definition of how to handle the ownership and what the government wants to do going forward with the airline.
Q: What are your plans for 2023?
A: 2023 we should see opening of some more regional routes and some inter-provincial destinations. Now the way we do Maputo in the south which is the hub is very inconvenient for the passengers. We want to deploy additional aircraft in the north. Maybe two more Q400s and one 737-700 and we would want to see what the oil gas industry is doing too and how we can grow to respond to that because usually the gas has very high demand and we have to go into a special project. So, we will see significant growth in 2023.
Q: How has your experience in the support side assisted your work as the CEO?
A: When I took over one of the big issues was reliability and on time performance. So that really helped me a lot, my previous experience in the network. It was interesting because, the same people were able to tackle it and to recover reliability and on time performance. We were losing market share at that time because we had some competitors in the domestic market. Maybe because of that we recovered it immediately. And now we are experiencing post COVID some issues but I think it has to do with current global logistics, quality of repairs, and availability of MRO and repair facilities.
One of the things that was very helpful was the training of the people. We are investing a lot in training younger managers, younger engineers, younger pilots and others in management functions which was tapped from my background in customer support. And it is really working well. I am very impressed with the youth, the way they are eager to learn and to implement what they have learnt.